Here is a guide to buying a flat in Munich. For Millenials. Really it's a guide for anyone but let's face it, millenials need it the most. We will keep a running tally of your net worth when important updates are called for. Let's start with an anchor then. You're a hard-working young man or woman (well, by millenial standards anyways, and luckily you've been told so many times that you're special [which is apparently the root of all millenials' problems] that you've managed to somehow outwit the system [which if you think about it is actually pretty impressive because you're basically witless -- what does that say about the wit level of the system!?]) and though you're essentially 40 years old which would have been teetering towards retirement age for your parents you've only just entered the workforce because you just thought you were oh so so special and that you could really do anything you put your mind to and that made it also pretty difficult to decide what you should actually end up doing because really if you can do anything then even once you've started doing one thing why not quit before you've even started and move on to the next thing? and so you kind of wandered aimlessly for quite a few years there amassing valueless pieces of [high-grade, though] paper that basically just say you spent a lot of time partying and/or relaxing in libraries and your parents gave some school(s) a HUGE amount of money but now you're shaping up and plans are to right the ship so-to-speak before you hit the big four-oh and so in your few years of actually finally pulling in a pay cheque and putting away a small chunk of each one we've come to our first anchor.
Net worth: 50,000 EUR
Not bad, right? Amazing, actually, for a millenial. That seems like a shit-load of money to any millenial. You could literally buy more than a thousand cases of Michelob with that. But since you're reading this we assume your plan is to purchase a flat. In Munich. First things first: what can you afford? Well, a down-payment is out of the question because flats in Munich start at around 500,000 EUR (well, you could get a one-room "bachelor" maybe in Neuperlach but then is that really Munich? I hear they don't count it as München-proper if there aren't at least 1.3 BMWs per household in a neighbourhood and even worse, Neuperlach's streets are not even paved in gold! They use a non-caloric rose-gold-like polymer infused with aluminum and diamond dust. Lame.) Any way you slice it you're not going to be able to afford much with a net worth of only 50 Gs. Especially because you'll have to pay for the following 3 important things (of course there are inevitably many, many other expenses, but these are up front and non-negotiable): (1) the notary, whose job is to take a template that has been passed around amongst notaries since some time in 1973 and fill in the lines that say "price", "buyer", and "seller" (or their German equivalents) and then get paid a cool very-high percentage of the amount that was inserted in the "price" slot; (2) the real estate tax (worst element of this three-element list); and (3) the Grundbucheintrag ("land registry entry") fee. The "approximate" cost for these three wonderful money grabs is 5 to 7 % of the cost of your flat. Let's quickly divert to our first appearance of the "millenial advice" pop-up feature of this article:
Millenial Advice Feature {1}: when someone gives you a range for how much something will cost, and especially in the particular case of purchasing an apartment, house, or other immovable good under the German Civil Code, do not under any circumstances look at the small end of the spectrum and think "ok it will cost 5% of the purchase price" because it will actually cost more like 8 or 9%. Don't ask us how that works, but that's the way it is.
So, heeding MAF {1}, and being rather liberal about things we'll take the not-so-far-out estimate of 8 per cent. Performing the following mathematical equation should be no problem for us millenials because through working towards our N number of degrees we have no doubt a good degree of advanced training in high temperature physics, quantum theory, advanced machine learning techniques for deep learning, complex financial transactions in common law, and others, and somewhere in there we should probably have learned how to determine what the maximum purchase price of something might be when 8% of it must be at most 50,000 EUR. Let's see... Thinking back... Right, 0.08x = 50,000... Therefore, x = 50,000 / 0.08 = 625,000 EUR. So that's our cap.
Before we go any further, I know what you're thinking. You're thinking (and please adjust for any cultural, social, or age-related language perturbations that might be required): "Shit, dog! I can afford a god-damn mansion! ... That's nearly a million Canadian dollars!". The latter is correct. That is nearly a million Canadian dollars as of September 22nd 2017 (and that's when the Loonie has been trading somewhat uncharacteristically high). The former, however, is very, very far from the truth. No, you cannot afford a god-damn mansion. Because this is Munich, you need to first consider the "Munich Tax" (see glossary side-panel, infra)
[Glossary Side-Panel Note 1: Munich Tax]: The Munich Tax [n] is not a tax per se. Rather, it is a lump sum amount that forms part of the cost of an immovable within the confines of the metropolitan area of Munich that gives you nothing but an address that ends with München. As of September 2017 it is 400,000 EUR.
So, remember that we can afford a flat that will ultimately cost 625,000 EUR. Subtracting the Munich Tax, we are left with 225,000 EUR to pay for the actual apartment itself. Sadly, that will not get you a mansion. In fact, it will not even get you something very nice. The next step, however, is finding that not-very-nice place. What you'll do here is spend approximately 3-5 years checking the ImmobilienScout every 7-9 minutes. Some quick millenial math shows that to be on average 4*365*24*60 / 8 = 262,800 checks on immobilientscout.de. Looking at the outcome that number actually looks a little small so we'll round up a little and note that you should expect to check the ImmobilienScout around 300,000 times before you find something that you convince yourself is worth buying (important note: even though it's not worth buying).
After wasting somewhere on the order of 200 weekends of your life visiting apartments that were supremely over-priced, far from the city centre, and frankly rather ugly, the next step is to let your standards start falling. Now, since you're a millenial, you've no doubt mastered the art of displaying an ironic detachment from any situation where you could have opened yourself up to vulnerability or taking a side in any meaningful or important decision. You'll need that vital experience here more than you likely ever have before. Another thing you'll need here is a lack of pride and an ability (which I guarantee you've accumulated the requisite 10,000 hours of expert-becoming power over the years) to silence any rational doubts that you bring up when you inevitably ask yourself why in the world you would be committing yourself to working 40+ hours a week for the rest of your life to put nearly every penny you earn into a place that you don't particularly like that much and accept blindly that the bank should hold full control over you and your life decisions from here to eternity and beyond. Once you've accomplished the above, the next step is to go to your bank and tell them (remember that here you'll have to work extra hard to silence any rational voice that might be left in your brain... one technique we recommend is to periodically stab your brain with a Q-tip) that you are ready to buy a flat.
This step is pretty easy and rather painless because despite the currently low interest rates there's nothing that a bank loves more than the guarantee of huge amounts of continuous income for the foreseeable future without having to do nearly any work in return. The banker will come to your house at your convenience making it seem like he's doing you a favor and will even probably give you the pen that you used to sign your life away at the end. [Millenial Buying Advice: keep the pen and any other free gifts going forward -- even if you don't like the colour -- because you will soon not be able to afford essentially anything other than your mortgage payments and you never know when you might need a new pen.] Now, since we've somehow found an apartment that's rationally worth maybe 200,000 EUR but we've added on the Munich Tax then we're looking at a selling price of 600,000 EUR. The sellers will also cleverly not include in the total price the cost of the parking space which you have no choice in whether you purchase it or not. This is normally around 20-50 thousand Euros (with no rhyme or reason as to where in particular it lands in that spectrum) and so we're now looking at around 625,000 EUR which coincidentally was our cap that we arrived at before. Then we have that 8% of fees which as you'll probably remember comes out to 0.08*625,000 = 50,000 EUR. So, new net worth...
Net worth 2: -625,000 EUR
Ouch.
But that's the bad news. Well, there's other bad news such as the fact that you have to live in this new (worse than your previous) home and it's pretty far from everything you used to like to go to and there's nothing comparable in your new loud and dangerous neighborhood and most things are broken and you have to spend more money that you don't have on trying to fix at least some of those broken things and just when you think you're done paying those associated purchasing fees you'll no doubt be blindsided on some idle Tuesday with a friendly letter informing you that you owe another 3 or 4 thousand Euros (what's the difference at this point, right?). But then something will occur to you: who cares? In the wise and immortal words of world-renowned drug smuggler George Jung's father Fred:
"Money isn't real, George. It doesn't matter. It only seems like it does."
